African nations urged to tap Islamic financing

Islamic finance is fast taking shape in Africa, and more so in East Africa, driven in part by the continent’s urgent need for new and innovative ways to fund infrastructure development.

Funding Africa’s development projects needs has been a long standing challenge. This has led to governments and private sector exploring all kinds of innovative financing mechanisms.

The need for the extra-finances to move forward the development agenda has led to the exploration of Islamic finance or Sukuk.

The Islamic Finance could play a potential role in delivering large infrastructural projects in Africa that will eventually transform the face of Africa.

Many African governments have been introducing new regulation as they seek Shariah-compliant alternatives for decreasing conventional funding sources and try to plug current account deficits.

The Islamic Economy has seen tremendous increase in recent years transcending its traditional geographic boundaries, its entrance into East Africa could revolutionize the region’s finance and banking sector, Tourism, and Hotel sector and Fast Moving Consumer (FMGs) goods.

To explore how East Africa can tap into the Islamic Economy, with an estimated global value of $2.3 trillion as at 2016, Kenya will host the 2nd edition of the East Africa Islamic Economy Summit (EAIES 2017) on April 10 and 11.

The summit comes at a time when East Africa’s traditional FDI sources are faced with changing political dynamics, uncertain global markets and divergent monetary policies hence making it the right moment for the region to diversify its investor portfolio.

Discussion points will focus on Islamic Finance and banking looking at its development within the East Africa; East Africa’s Halal Economy – a lucrative but invisible market – Opportunities for EAC; Takaful & Re-takaful sector opportunities for East Africa.

“East Africa like the rest of Africa face a severe infrastructure deficit, with budgets under pressure due to low commodity prices and changing geo politics from the region’s traditional development and investment partners in Europe and America. Sharia compliant bonds or Sukuk must be an alternative to finance East Africa’s projects but their issuance are hindered by technical and legal hurdles, limited knowledge by end users and policy makers, making this summit an important platform to hear from experts in Islamic Finance instruments,” notes Agnes Gitau from GBS Africa.

-The Halal Economy-

Sub-Saharan Africa regional spending on halal food was about USD114bn in 2013 based on Thomson Reuters data. Emphasis has been mainly on halal meats and meat products, but over the past few years, the trend has been shifting to the introduction of halal franchises, prepared meals, canned, frozen and instant foods.

A great example for East Africa is South Africa which in spite of its small Muslim community has emerged as one of the five largest producers of halal products worldwide largely due to its access to the rest of the continent and the presence of highly advanced halal certification program.

“East Africa member states must explore opportunities to grow its Halal Food sector, given its growing Muslim Population and its shared cultural values where Halal food is not only consumed by the Muslim community but most people in the region,” adds Ms Gitau.

Another sector the summit will cover in detail is Halal Tourism and how the region’s struggling tourism sector can get a slice of Halal tourism, one of the fastest growing areas of global tourism estimated at USD219 billion. Tourism stakeholders will discuss what infrastructure our region requires to tap into this market.

The summit organisers GBS Africa in partnership with Anjarwalla & Khanna and IsFin – Emerging Markets Advisors are delighted to bring this forum to East Africa for the second year.